(AOF) – The automotive supplier Faurecia, a company of the Forvia group, announced on Monday that it expects an increase in its sales and its profitability in 2023, after having published annual results above expectations. For the 2022 financial year, the manufacturer generated operating profit of 1.12 billion euros, an improvement of 29.4% over one year and representing 4.4% of sales, against a rate of 5. 5% displayed in 2021.
Its turnover increased by 63% over one year, to 25.46 billion euros. At constant scope and exchange rates, its sales increased by 17%.
As for its net cash flow, this increased by 54.6% compared to 2021, to 471 million euros.
Analysts expected, on average, a turnover of 25.04 billion euros and an operating profit of 987.9 million euros, or a margin of 3.9%, for 2022.
Faurecia announced “significant progress in the integration process” of Hella and thus raised its forecasts of synergies linked to this transaction.
Initially expected to exceed €250 million in 2025 at Ebitda level, cost synergies should ultimately exceed €300 million. Commercial synergies will amount to more than 400 million euros in 2025 at EBITDA level, whereas they were previously estimated at between 300 and 400 million euros.
For 2023, Forvia is banking on sales of between 25.2 and 26.2 billion euros, on an operating margin of between 5% and 6% of sales and on a net cash flow of more than 1.5% of turnover.
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Key points
– Seventh-largest equipment supplier in the world, created in 1999 under the name Faurecia;
– Sales of €15.6 billion, broken down into 6 activities: clean mobility, lighting, interior systems, seats, electronics (sensors, automated driving, energy management) and vehicle life cycle;
– Business model aimed at becoming the preferred innovation and integration partner of global car manufacturers;
– Open capital with 2 strong positions: the Hueck/Roepke family shareholders for 9% and, for 12%, the strategic shareholders – Elior (5.05%), Peugeot 1810 (3.02%), BPI France (2.16 %) and Dongfeng (1.97%), Michel de Rosen chairing the board of 12 directors, Patrick Koller being CEO;
– Maintenance of financial solidity after the acquisition of HELLA having generated net debt of €8.4 billion at the end of June 2022: capital increase in June and refinancing provided by a banking agreement and a program of disposals of non-strategic assets of €1.5 billion by the end of 2023.
Challenges
– Towards a new 2025 strategic plan expected for the fall;
– Innovation strategy: 63 R&D centers and portfolio of nearly 15,000 patents: dedicated ecosystem supported by academic and technological partnerships, industrial partnerships for the group’s carbon neutrality (Schneider Electric, Engie, Artelia, KPMG), artificial intelligence (Accenture), cloud (Microsoft), data analytics (Palantir) and cybersecurity (GuardKnox), collaboration or acquisition of startups and joint ventures (Michelin, Aptoide);
– “Inspired to care” environmental strategy, validated by the SBTi and aiming for carbon neutrality of scopes 1 and 2 in 2025 and total neutrality in 2045:
through eco-design, renewable energy and investments, for €1.1 billion, in sustainable technologies from 2021 to 2025, creation of a sustainable materials division supported by partnerships: Veolia for 30% of interior modules to recycled plastics by 2025 / SSAB (green steel) for seat structures with a very low CO2 footprint / the GravitHy conglomerate for the industrial project, in Fos-sur-Mer, for the production of carbon-free steel / hydrogen-system solutions batteries, trucks and storage – offered in partnership / public and private “green” bond issues;
– Order intake over €15 billion at the end of June, in strategic and profitable activities: electronics (€5 billion), €4.7 billion for electric vehicles, €4.1 billion for China and €8.7 billion € in premium vehicles and SUVs.
Challenges
– Operational merger with HELLA, integrated since the end of January (€250m of cost savings expected for 2025);
– Impact of inflation: offset at 80% on 1
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semester by the impact on sales prices and contractual policies with suppliers and customers, which will be fully effective on the 2
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semester ;
– Impact of energy shortage risks in Europe: safety stock of €100 million;
– After a 9% increase in sales and a net loss of €296 million on 1
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semester, 2022 objectives confirmed: sales of €23 to €24 billion, operating margin of 4 to 5%, free cash flow at breakeven and debt leverage of 3;
– Suspension of the payment of the dividend for 2021.
Negotiations with builders
On average, equipment manufacturers represent between 60 and 85% of the manufacturing cost of a vehicle. According to the Federation of Vehicle Equipment Industries (Fiev), negotiations are very tense with manufacturers regarding the passing on of increased costs. The price increases concern both electronic components, raw materials, such as steel, nickel, lithium or palladium, energy and transport. Equipment manufacturers mainly negotiate with Stellantis and Renault to set up indices to pass on increases. They are also betting on innovation, differentiation, upgrading and internationalization.